Small Business Tax Breaks May Help Invigorate Economic Recovery

Congress is reviewing the The Small Business Tax Act of 2010 this week, which is likely be good news for entrepreneurs and small business owners across the country who have been struggling to prosper in a sluggish economic recovery. The Act proposes a series of tax credits and extended tax breaks for small business owners. The main provisions of the new act include:

A Sluggish Recovery, with Some Bright Spots
The Small Business Tax Act arrives on an uncertain scene of economic recovery for small businesses. Indicators of economic health have been mixed. According to a recent survey by the National Association for Business Economics, reported by CNNMoney, “39% of companies expect to add employees over the next six months, the highest level of planned hiring since January 2008.” However, “the pace of the economic recovery slowed in the second-quarter.”

Contributing to the slow growth has been the continued credit crunch, which has been especially hard on small businesses. “The formation and growth of small businesses depend critically on access to credit, said Fed Chairman Ben Bernanke, as reported in The Wall Street Journal. He continued, “Unfortunately, those businesses report that credit conditions remain very difficult.”

An increase in the availability of credit cards has been a bright spot, however. Even while credit availability in the form of loans continues to lag, small business can turn to credit cards for short term loans. While credit cards often get a bad rap for high interest rates and fees, a recent report concluded that start up businesses who use credit cards actually increase their revenue by .11% for every 1% increase in credit card use, dramatically translating to a $5,500 increase in revenue for every $1,000 of credit card use.

It’s clearly a challenging time to be a small business owner, but taking advantage of the opportunities, like credit cards loans and potential new tax breaks, might help many small businesses rally. If you are an entrepreneur and need help figuring out how the new provisions of The Small Business Tax Act of 2010 might affect your small business, it’s a good idea to Find a Tax Lawyer.